Indefinite Delivery Contracts Make Up a Third of Agency Awards

Report was written for Sen. Claire McCaskill, D-Mo. Report was written for Sen. Claire McCaskill, D-Mo. Flickr user Senator Claire McCaskill

The sometimes-controversial contract type known as indefinite delivery/indefinite quantity accounted for an annual $130 billion of agency awards from 2011-2015, or about one third of all federal contract spending, the Government Accountability Office found.

An April 13 report reviewing contracts from January 2016 to the present found that about two thirds of the IDIQ contracts were for services. “Although the Federal Acquisition Regulation states a preference for multiple-award IDIQs, the majority of dollars governmentwide, approximately 60 percent, were obligated through single-award IDIQs,” GAO said.

The biggest users of IDIQ contracts were the departments of Defense, Homeland Security, Health and Human Services, and Veterans Affairs, which together awarded about 68 percent of all related obligations. Their overall use in dollar amounts declined from 2011 to 2015, though the proportion remained stable.

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Ten of the 18 single-award IDIQ contracts reviewed were not competed, generally because only one contractor could meet the need, the report said.

The report was sent to Sen. Claire McCaskill, D-Mo., ranking member on the Homeland Security and Governmental Affairs Committee, who has long criticized federal procurement for not fostering more competition for contracts. Common objections to IDIQs include the risk of extended liability for the government, inadequate funding and late deliveries.

“Contracting officials at DoD cited flexibility as the main advantage for using IDIQ contracts, noting that it was easier and faster to place an order under an existing IDIQ contract than to award a separate contract when a specific need arose,” the auditors said. “Price and technical approach can still be evaluated at the time of placing an order, but the overall turnaround time, they said, is significantly less than for a new contract. Contracting officials also stated that IDIQ contracts were easier to administer.”

Again using the Pentagon, the largest contractor, as an example, GAO said prices on IDIQ contracts and orders were established at different points, depending on how well-defined the requirements were at the time of the contract award.

 “For example, for a Navy contract to buy commercial radios used in fixed-wing aircraft, the pricing was established upfront in the contract since the radios were defined products that have been used for many years,” the report said. “In contrast, for an Air Force contract to buy research and development services for cybersecurity and malware detection, all pricing was established at the order level since specific research needs were not known when the contract was awarded.”

(Image via Flickr user Senator Claire McCaskill)

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